Guide to Home Warranty Insurance

in British Columbia

Published by BC Housing
2013
About this Guide

This guide is designed to provide practical information to help consumers in British Columbia make
informed decisions about their home purchases.

ABOUT BC HOUSING

Through the British Columbia Housing Management Commission (BC Housing) the provincial government
works to strengthen consumer protection for buyers of new homes in British Columbia. BC Housing is
responsible for:

• licensing residential builders and building envelope renovators, and administering Owner
Builder Authorizations,

• ensuring that new homes are covered by home warranty insurance,

• monitoring the provision of third-party home warranty insurance, and

• carrying out research and education to benefit the residential construction industry
and consumers

BC Housing does not provide home warranty insurance, nor does it mediate or otherwise adjudicate
disputes between home buyers and builders or private warranty providers.

We welcome your questions and comments. You can reach us at:

Licensing and Consumer Services 203 – 4555 Kingsway

Branch of BC Housing Burnaby, BC V5H 4T8
www.bchousing.org Telephone: 604-646-7050
Email: licensinginfo@bchousing.org Toll-free: 1-800-407-7757
Fax: 604-646-7051

ACKNOWLEDGEMENTS

BC Housing thanks the representatives of many organizations involved in the residential construction
industry in British Columbia, including warranty providers and consumer, builder and real estate
organizations, which provided valuable input in the development of this guide.

DISCLAIMER

This guide is intended to provide readers with general information only. The purchase and sale of real
estate and the condition of homes and their construction are complicated issues. Readers are urged not
to rely simply on the contents of this guide, but to consult with appropriate and reputable professionals
and construction specialists, including lawyers, notaries, accountants, architects, engineers and building
inspectors, as appropriate. The authors, contributors, funders and publishers assume no liability for the
accuracy or the statements made or for any damage, loss, injury or expense that may be incurred or
suffered as a result of the use of or reliance on this guide. The views expressed herein do not necessarily
represent those of individual contributors or BC Housing.

2
Table of Contents

Protecting Your Largest Investment 5

What is home warranty insurance? 5

About this guide 5

Who’s Involved in Home Warranty Insurance Protection 6

Owners 6

Builders 6

Warranty Provider 6

Licensing and Consumer Services, Branch of BC Housing 7

BC Financial Services Authority (BCFSA) 7

The Insurance Council of B.C. 7

Home Warranty Insurance: How It Protects You 8

Mandatory Home Warranty Insurance 8

What’s Included in 2-5-10 Coverage 8

2-year materials and labour warranty 8
5-year building envelope warranty 9
10-year building structural defects warranty 9

What’s Excluded from 2-5-10 Coverage 9

Limits on Coverage 10
When 2-5-10 Coverage Begins 10
Single detached dwellings (non-strata) 10
Strata homes 10
Repairs or replacements 10

Buying a Resale Home with Home Warranty Insurance 11

Owner-built Homes 11
Owner builder disclosure notice 11
Buying an owner-built home 12

Building Envelope Renovations 12

Other Types of Protection 13

Builder warranties 13
Manufacturers’ warranties 13

Summary of Coverage 13
BC HOUSING Guide to Home Warranty Insurance in British Columbia 3
Table of Contents

Getting the Most Out of Your Home Warranty Insurance 14

Before You Move In 14

During the Home Warranty Period 15

Know your coverage 15
Make note of coverage expiry dates 15
Make a claim 15
Safeguard your documents 15
After coverage expires 15

Maintenance 16

Strata Properties 16

If You Discover a Possible Defect 17

Communicating a Possible Defect 17

Working With Your Warranty Provider 18

Access to Inspect and Repair 18

Resolving Disputes 19
Mandatory Mediation 19
Notice to Mediate 19

Defects in Owner-built Homes 20

Checklist 21

Glossary 22

Additional Resources 23

Watch for these icons throughout the document:

GENERAL INFORMATION

STRATA INFORMATION

i MORE INFORMATION

BC HOUSING Guide to Home Warranty Insurance in British Columbia

Protecting Your
Largest Investment

Buying a home is the largest single investment most people make in

their lives. Naturally, you want to be protected against as many problems
as possible, including construction defects.
That’s why home warranty insurance is an important part of buying your home,
whether it’s brand new or a resale home that still has home warranty insurance
coverage. Along with other forms of insurance, such as fire and theft insurance, home
warranty insurance is designed to give you some financial security and peace of mind Home warranty insurance
against risks that you can’t control. is designed to give you
some financial security and
What is home warranty insurance? peace of mind against risks
Home warranty insurance protects new homes in British Columbia against that you can’t control.
construction defects such as materials and labour, building envelope and structural
defects. It is Canada’s strongest construction defect insurance.

B.C’s Homeowner Protection Act and its Regulations (Act) require that all new homes
constructed under building permits applied for on or after July 1, 1999 (or where
construction started on or after July 1, 1999, in areas not requiring building permits)
must be covered by home warranty insurance unless they are specifically excluded
by the Act or its regulations.

The Act, which covers most of the homes built in B.C. since 1999, creates a province-
wide system to protect home buyers that is managed by Licensing and Consumer
Services, a branch of BC Housing, responsible for:
• licensing residential builders and building envelope renovators i MORE INFORMATION
administering Owner Builder Authorizations Visit www.bchousing.org
• ensuring that new homes are covered by home warranty insurance to view the Homeowner
Protection Act and Regulations
• monitoring the provision of third-party home warranty insurance or check out helpful online
• carrying out research and education to benefit the residential construction resources.
industry and consumers.

About this guide

This guide describes how the home warranty insurance system works, what home
warranty insurance covers, how to get the most out of your insurance, what to do if
you discover a possible defect, and where to get more information.

While this guide is useful, there is no substitute for reviewing your home warranty
insurance policy carefully and understanding more precisely what is covered.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 55

Who’s Involved in Home Warranty
Insurance Protection

Owners
Owners of homes protected by home warranty insurance are expected to be familiar
with their home warranty insurance policy and carry out maintenance in accordance
with maintenance information from your warranty provider or builder. If a suspected
defect arises, they are to address it immediately and take steps to minimize further
damage. See the Getting the Most out of Your Home Warranty Insurance section in
this guide for further details.

Owners of strata-titled homes have coverage for both their unit and common
property, and should make themselves aware of the coverage in both policies. ROLE OF STRATA LOT
OWNER AND STRATA
CORPORATION
Builders
Strata-titled homes have two
Under the Homeowner Protection Act, every new home offered for sale or built under
different types of home
a construction contract in B.C. must be constructed by a Licensed Residential Builder warranty insurance coverage:
(owner-built homes are an exception to this; see page 8 for exemptions). Licensed one that covers each individual
Residential Builders can be either builders or developers, and your home warranty unit and one that covers the
insurance rights are the same whether your policy was provided by a builder or common property. It is impor-
developer. For convenience, this guide refers to both as builders. Builders are tant for unit owners and strata
responsible for arranging home warranty insurance on the homes they sell or build corporations to understand
under contract with an owner. the differences between these
different policies and their
After a new home is completed, most builders (or your warranty provider) will give respective expiration dates.
you a home maintenance manual or other information describing how the mechanical
and other systems work, where to find controls, and a schedule of maintenance work
that will prevent damage to the home. Your warranty insurance coverage is contingent
on the proper maintenance of your home being carried out in accordance with the
maintenance manual if one has been provided.

Although the warranty provider is ultimately responsible for repairing any construction
defects covered by a home warranty insurance policy, in many cases the original
builder will have a contractual obligation with the warranty provider to carry out
warranty repairs. Always notify both the warranty provider and the builder in writing
for any work to be done under the home warranty insurance policy.

Warranty Provider
The warranty provider issues a home warranty insurance policy when the home is
completed or occupied. Only insurance companies authorized by the provincial
BC Financial Services Authority are permitted to provide mandatory home warranty
insurance in B.C. A list of authorized home warranty insurance companies is available
at www.bchousing.org.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 6

Who’s Involved in Home Warranty
Insurance Protection

Licensing and Consumer Services, a branch of BC Housing

The Licensing and Consumer Services branch of BC Housing administers the
Homeowner Protection Act and regulates Licensed Residential Builders to ensure they
arrange for warranty insurance as required by the Act (or that an applicable exemption
from providing home warranty insurance is available and has been obtained).
BC Housing does not regulate warranty providers or adjudicate warranty claims.

BC Financial Services Authority i MORE INFORMATION

The BC Financial Services Authority (BCFSA) is a provincial government agency You can learn more about
that regulates insurance companies in B.C., including those that provide home BCFSA at www.bcfsa.ca.
warranty insurance. BCFSA has the authority to investigate the business practices of
insurance companies and to take action in cases of appropriate conduct. However,
it is not empowered to adjudicate disputes over insurance coverage or to require
insurance companies to change decisions on claim issues.

The Insurance Council of B.C. i MORE INFORMATION

Some warranty providers choose to act through an insurance broker. Insurance You can learn more about the
brokers are licensed by the Insurance Council of B.C. This Council has the authority Insurance Council of B.C. at
to investigate the business practices of insurance brokers and to take action in www.insurancecouncilofbc.com.
cases of inappropriate conduct.

i MORE INFORMATION

A list of authorized home

warranty insurance companies
in B.C. is available at
Only insurance companies
www.bchousing.org.
authorized by the provincial
BC Financial Services Authority
are permitted to provide mandatory
home warranty insurance in B.C.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 7

Home Warranty Insurance:
How It Protects You

Mandatory Home Warranty Insurance

Home warranty insurance is required for all new homes offered for sale or under a
construction contract with an owner unless there is an applicable exemption.1
This warranty insurance is sometimes called a third-party warranty, the mandatory
warranty or the 2-5-10 warranty. The cost of the warranty insurance is included in
the purchase price of your home.

The insurance protects homeowners from a range of construction defects for designated
periods of time: two years on labour and materials (some limits apply), five years on
the building envelope, including water penetration, and 10 years on the structure. i MORE INFORMATION

Check out the New Homes

The requirement for a minimum 2-5-10 warranty insurance policy cannot be waived
Registry at www.bchousing.org.
by any separate contract between you and the builder.
This free online tool allows you
Some residential buildings may be exempt from the requirement for home warranty to quickly find out if a new or
insurance, including: resale home or new under
construction has a policy of home
• homes built by owner builders (a separate section of this guide describes warranty insurance and is built
provisions for owner-built homes), by a Licensed Residential Builder.
• manufactured homes (mobile homes and factory-built units) that have not been
significantly modified and/or added onto on site,
• non-stratified hotels, floating homes, motels, dormitories and care facilities,
• multi-unit rental buildings where the sale of any individual unit is restricted by
a 10-year covenant registered against the title, and
• social housing

What’s Included in 2-5-10 Coverage

2-YEAR MATERIALS AND LABOUR WARRANTY
Home warranty insurance
• Covers any defect in materials and labour or violation of the Building Code2
for 12 months for all new homes, other than the common property of a strata covers:
corporation, and 15 months for the common property of strata corporations. • two years on labour and
• Covers defects in materials and labour supplied for the electrical, plumbing, materials (some limits apply)
heating, ventilation and air conditioning delivery systems, as well as for the • five years on building
exterior cladding, caulking, windows and doors, that may lead to detachment
envelope
or material damage to the new home and violation of the Building Code,2 for 24
months for all new homes, including the common property of strata corporations. • 10 years on the structure

1
This applies to new homes built under building permits applied for on or after July 1, 1999. In areas where
building permits are not required, it applies to new homes if construction began on or after July 1, 1999.
2
To be covered, a violation of the Building Code must constitute an unreasonable health or safety risk, or
cause (or be likely to cause) material damage to the new home.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 8

Home Warranty Insurance:
How It Protects You

5-YEAR BUILDING ENVELOPE WARRANTY

The building envelope includes the components that separate the indoors from
the outdoors, including the exterior walls, foundation, roof, windows and doors.
The minimum warranty coverage is five years for defects in the building envelope,
including a defect that permits unintended water penetration such that it causes,
or is likely to cause, material damage to the new home.

10-YEAR BUILDING STRUCTURAL DEFECTS WARRANTY WHAT’S A DEFECT?

The minimum warranty coverage is 10 years for defects in materials and labour that Defects are defined by the
result in the failure of a load-bearing part of the new home, and for any defect that Homeowner Protection Act as
causes structural damage that materially and adversely affects the use of the new damages resulting from design,
home for residential occupancy. materials and labour that are
contrary to the Building Code,
or damages that require repair
What’s Excluded from 2-5-10 Coverage or replacement due to the
negligence of the builder or a
Coverage may exclude:
person or company working for
• design, materials or labour supplied by the owner or by someone other than the the builder.
builder or their workers or sub-trades
Non-compliance with the
• landscaping
Building Code is considered a
• non-residential detached structures (but parking structures, recreational and defect covered by home warranty
amenity facilities in multi-unit buildings are covered) insurance if the non-compliance
• commercial use areas constitutes an unreasonable
• roads, curbs and lanes (but walkways and driveways are covered) health or safety risk, or if it has
resulted in, or is likely to result in,
• site grading and surface drainage, except as required by the Building Code
material damage to the new home.
• the operation of municipal services
• septic tanks and fields, and water quality and quantity.
Check with your warranty
In addition, some specific defects can be excluded, including the following:
provider about exceptions
• normal wear and tear to your coverage.
• normal shrinkage of materials from construction
• those arising from the use of the home for non-residential purposes
• damage caused by anyone other than the residential builder
• damage caused by insects or rodents
• failure of an owner to prevent or minimize damage
• acts of nature
• failure to carry out proper maintenance.
See your policy documents for full details. Consult BC Housing’s Residential Construction
Performance Guide at www.bchousing.org.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 9

Home Warranty Insurance:
How It Protects You

The Residential Construction Performance Guide explains how new homes should
perform and which defects are covered under home warranty insurance in British
Columbia. This includes defects in design, labour or materials. The guide is designed
primarily for conventional low-rise, wood-frame homes which is the main method of
residential construction in B.C.

Homeowners can use the guide to determine whether a possible construction defect
might be covered by home warranty insurance and to better understand how warranty
providers may evaluate claims in new homes.

Limits on Coverage
Coverage offered on claims is the lesser of $200,000 or the first owner’s purchase price
for fee-simple single-family homes, and the lesser of $100,000 or the first owner’s
purchase price for strata homes. For common strata property, coverage is limited to
the lesser of $100,000 times the number of units, or $2.5 million per building.
STRATA INFORMATION
When 2-5-10 Coverage Begins Strata owners have respon-
Knowing starting dates for home warranty insurance coverage is important to sibilities in addition to those
determine when coverage expires. See your policy documents for details. described above. Strata-titled
homes have two different types
SINGLE DETACHED DWELLINGS (NON-STRATA) of home warranty insurance
coverage: one that covers each
• Contract or custom homes (built on land owned by the homeowner): date of individual unit and one that
first occupancy, date of occupancy permit, or date the home was completed covers the common property.
and ready for occupancy, whichever comes first. It is important for unit owners
• Spec homes (built on land that was owned by the builder or developer): date of first and strata corporations to under-
occupancy or date of transfer of legal title to first owner, whichever comes first. stand the differences between
these different policies and their
STRATA HOMES respective expiration dates.

• Strata units: date of first occupancy or date of transfer of legal title to first owner,
whichever comes first.
• Common property: date of first unit occupancy in strata building or date of
transfer of legal title to first owner in building, whichever comes first.

REPAIRS OR REPLACEMENTS

Repairs or replacements made under home warranty insurance are covered until the
later of the first anniversary of their completion or the expiry of the original warranty.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 10

Home Warranty Insurance:
How It Protects You

Buying a Resale Home with Home Warranty Insurance

Because the warranty applies to the home and not the owner, it remains active if the
house or unit is sold within the warranty period. Tips when buying a resale home:
• Before completing the sale, review the policy documents to find out coverage
expiry dates and ask the seller if any claims have been made. Only an owner is
entitled to get a claims history report from the warranty provider (available for a
$25 fee), so you may want to make it a condition of sale.
• If the home was constructed with a building permit issued after November 19, 2007,
look it up on BC Housing’s online New Homes Registry, searchable by legal or
civic address. It will tell you whether the home has a home warranty insurance i MORE INFORMATION
and the name of the warranty provider, or whether the home was built by an To find out more about the
owner builder. If you cannot find the address and you think the home is less buying process, visit BC Housing’s
than 10 years old, call the Licensing and Consumer Services branch of BC Housing. website at www.bchousing.org
• Make sure you obtain the policy documents, maintenance manual (if one was to view the Buying a Home in
provided to the original purchaser; if not, ask the warranty provider), and other British Columbia: A Consumer
manuals from manufacturers and warranties for appliances, products or systems. Protection Guide or see Buying a
Home by the Real Estate Council
of BC at www.recbc.ca.
Owner-built Homes
An owner-built home is a single dwelling unit constructed for personal use by a land
owner. Owner builders are exempt from the Homeowner Protection Act requirement to
obtain a licence as a residential builder and to arrange for home warranty insurance.
However, prior to starting construction, they must obtain authorization from Licensing
and Consumer Services.

Owner builders must also build or directly manage the construction of the new home.
If someone other than the owner builder performs a construction management or
builder function, that person must be a Licensed Residential Builder and must arrange
for home warranty insurance. Owner builders must own and use the home for their
personal use for at least one year after obtaining final inspections before offering it for sale.

OWNER BUILDER DISCLOSURE NOTICE

A home built by an owner builder must not be sold for at least one year after first
occupancy of the home, unless the owner builder has obtained a special exemption
from the Registrar of BC Housing. Check BC Housing’s New Homes Registry at
www.bchousing.org to see if an owner-built home can be legally sold. If an owner-
built home is sold within 10 years of first occupancy, the seller must provide any
prospective purchaser with a copy of the Owner Builder Disclosure Notice issued by
the Licensing and Consumer Services branch indicating the home was not built by a
licensed builder and if it has home warranty insurance (most owner-built homes do not).

BC HOUSING Guide to Home Warranty Insurance in British Columbia 11

Home Warranty Insurance:
How It Protects You

BUYING AN OWNER-BUILT HOME

An owner builder who sells a home without home warranty insurance is subject to
the 10-year statutory protection provision of the Homeowner Protection Act and agrees
with subsequent purchasers that the home is free from:
• defects in materials and labour for at least two years after original occupancy,
• defects in the building envelope for at least five years from original occupancy, and
• structural defects for at least 10 years after original occupancy. A home built by an owner
builder must not be sold for
Some exceptions apply and are listed in the Homeowner Protection Act and its Regulations.
at least one year after first
If you are purchasing an owner-built home, find out how much time is left on the occupancy of the home.
2-5-10 year components of the statutory protection. The date of original occupancy is
determined by looking at the date of the occupancy permit or, if there is no permit,
the date of actual first occupancy. This date will be shown on the Owner Builder
Disclosure Notice, as well as the New Homes Registry.
i MORE INFORMATION

To learn more about Buying

Although the minimum standards of statutory protection may appear similar to those and Selling an Owner-built
provided by home warranty insurance, it is important to understand that if the owner Home, check out BC Housing’s
builder is unwilling or unable to attend to defects, there is no third-party home warranty website at www.bchousing.org.
insurance policy backing them up. Litigation may be the only remedy available.

Building Envelope Renovations i MORE INFORMATION

Owners of homes in some multi-unit buildings built before July 1999 may need significant Check out BC Housing’s
repairs to the building envelope. The Homeowner Protection Act requires that building Maintenance Matters series
envelope renovations on multi-unit buildings be covered by materials and labour and water at www.bchousing.org.
penetration warranty if they are less than 25 years old, if three or more units are involved. These helpful bulletins and
companion videos explain the
Warranty insurance coverage on building envelope renovations begins on the date importance of building
the repairs were substantially completed. The minimum coverage includes materials maintenance and provide tips
and labour for two years and the building envelope for five years, but does not include and checklists for homeowners
coverage for structural defects. As well, the work must have been done by a Building and stratas.
Envelope Renovator licensed by BC Housing.

If you are considering buying a unit in a building that has had building envelope repairs,
find out if the repairs are covered by home warranty insurance on the common property,
and, if so, how much time is left on the policy. Get written confirmation of any warranty
insurance provided. Owners are responsible for carrying out regular inspection and
maintenance of the building envelope renovation as part of their warranty insurance
policy. Make sure to inspect the components for defects before the warranty period expires.

Some multi-unit homes in which building permits were obtained or building envelope
renovations commenced after October 2000 will have warranty insurance on the repair;
those repaired before October 2000 will not.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 12

Home Warranty Insurance:
How It Protects You

Other Types of Protection

BUILDER WARRANTIES

Some builders may offer additional warranties as a part of their customer service,
but the government does not regulate these builder warranties, and they must be
enforced as you would any other contract. Be sure to get any warranties from the
builder in writing.

MANUFACTURERS’ WARRANTIES

Many building components (such as flooring, cabinets, windows, plumbing fixtures

and fittings) come with a warranty from the product manufacturer that extends
beyond the mandatory home warranty insurance coverage. Ask the builder for
copies of any manufacturer’s warranties. These warranties may be in the name of
the builder, so find out if you need to have the warranty transferred to you.

Summary of Coverage
Homes built before the Homeowner Protection Act came into effect in 1999 may or
may not have warranty protection. The table below summarizes the home warranty
insurance protection that may apply to homes in B.C.

TYPE OF HOME TYPE OF PROTECTION

New home constructed under a building Mandatory third-party home warranty insurance applies
permit applied for on or after July 1, 1999* (with certain exceptions, as described in this guide).

Resale home constructed under a building Some or all of any existing third-party home warranty
permit applied for on or after July 1, 1999* insurance may have expired, but any remaining coverage
applies. Subsequent purchasers automatically inherit the
benefit of the remaining warranty insurance coverage.

Owner-built home constructed by an owner Statutory protection applies for the first 10 years after
builder under a building permit applied for occupancy. Some owner builders also arrange for home
on or after July 1, 1999* warranty insurance. Check Owner Builder Disclosure Notice
provided by the seller.

Home constructed under a building No home warranty insurance coverage.

permit applied for before July 1, 1999

* Or a new home in a geographic area in which building permits are not required, where construction
commenced on or after July 1, 1999.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 13

Getting the Most Out of
Your Home Warranty Insurance

If you don’t have your policy documents when you move in, contact your builder or
check BC Housing’s New Homes Registry to find out who your warranty provider is and
contact them as soon as possible to obtain the documents.

As the homeowner, you have responsibilities under a home warranty insurance policy.
Read the policy documents carefully to find out what is excluded and under what
conditions you risk limiting your coverage. For example, home warranty insurance
coverage may be limited if:
• the original owner supplied design, materials or labour
• you don’t adequately maintain your home in accordance with the maintenance
information provided by your builder or warranty provider
• changes, alterations or additions are made to your home, after initial occupancy,
by anyone other than the builder
• you do not take timely action to prevent or minimize loss or damage, including
the failure to give prompt written notice to the warranty provider of a defect or
discovered loss or a potential defect or loss
• the home is used for non-residential purposes
• you don’t follow the specified procedure for reporting claims
To be covered, you must report a problem in writing to both the warranty provider and
the builder before the applicable warranty coverage expiry dates.

Before You Move In

In a new home, the buyer and builder inspect the property together prior to closing
or settlement. This is called a walk-through, new home orientation or pre-delivery
inspection, and this is usually your first opportunity to inspect the new finished home.

During the walk-through, you and your builder will verify that all terms of the contract
have been met, that the home is substantially completed and that major items are in
working order.

If your builder has brought an inspection form, make sure to fill it out completely, note
any incomplete or deficient work in writing and set a reasonable date for the builder
to complete any repairs needed. Home warranty insurance providers generally rely
on this form to determine if they will cover physical damage to materials such as Do not delay calling or
finished flooring, countertops and plumbing fixtures. Document the inspection by writing the warranty
taking pictures. provider with questions
about coverage, forms,
deadlines.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 14

Getting the Most Out of
Your Home Warranty Insurance

During the Home Warranty Period

KNOW YOUR COVERAGE

Make sure you understand the extent and limitations of your coverage by reading
through your insurance documents. You can also search BC Housing’s free online
Residential Construction Performance Guide. It explains how new homes should perform
and which defects are covered by the home warranty insurance.

MAKE NOTE OF COVERAGE EXPIRY DATES

Make note of what is covered, the expiry dates and what your responsibilities are.
Keep in mind that strata-titled homes have separate warranties for the unit and
common property, and their expiry dates are likely different. Before each expiry
date, carefully inspect everything that is covered by the warranty.
i MORE INFORMATION
MAKE A CLAIM
Check out BC Housing’s free
If you need to make a claim for defects, not otherwise taken care of by your builder, online Residential Construction
be sure to send details in writing to your warranty provider. You must make claims in Performance Guide at
writing to the builder and the warranty provider before the expiry date to be covered. www.bchousing.org.

Call or write the warranty provider if you have questions about coverage, forms,
deadlines, the builder’s obligations or your responsibilities.

SAFEGUARD YOUR DOCUMENTS

Store the warranty insurance policy in a safe place, together with your other documents
relating to the home, such as the maintenance manual, manuals for appliances,
walk-through inspection report and other warranties.

In addition, your policy will include a sticker for you to place on or near the main
electrical switch box identifying the warranty provider and coverage expiry dates

AFTER COVERAGE EXPIRES

Problems that arise after coverage expires are your responsibility. However, if the
builder repaired or replaced items during the coverage period, those items are
covered for at least one year from the date the repairs were completed.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 15

Getting the Most Out of
Your Home Warranty Insurance

Maintenance
Maintaining your home is important to protect your home warranty insurance
rights. If you are the first owner of a new home, make sure to obtain a copy of a
maintenance manual from the builder or warranty provider (if buying a resale
home, obtain it from the seller).

The manual provides information on the care and maintenance of the new home,
including the maintenance of common property for stratas. If a manual has been DETACHED HOME OR
provided and you don’t perform the maintenance as outlined, the warranty STRATA UNIT
provider may deny your claim. Be aware that Licensed Residential Builders and
An owner of a detached home
warranty providers have a responsibility to provide maintenance information to or strata unit should have the
the original buyers of a home if they want to make home warranty insurance home warranty insurance policy
coverage conditional upon proper maintenance. from the warranty provider, and
any maintenance information

Strata Properties provided by the builder or

warranty provider.
Unit owners are responsible for maintaining their units and reporting any problems
under the individual unit policy to the builder and warranty provider, while the OWNER-BUILT HOME
strata corporation is responsible for maintaining the common property (e.g. exterior
A buyer of an owner-built home
walls, windows, floors, roofs, piping and electrical systems that make up an individual
that does not have home
unit) and reporting any problems under the policy covering common property.
warranty insurance should have
However, you should report any problems with common property to the strata the Owner Builder Disclosure
council and/or the building manager, and follow up to make sure they act on any Notice.
problems prior to coverage expiry.
STRATA CORPORATION
The strata corporation may hire a property manager to keep track of documents,
organize inspections and oversee maintenance and repairs, but it is still the A strata corporation should have
corporation’s responsibility to ensure that the terms of the policy are met. the home warranty insurance
policy for the common property
Strata corporations should: from the warranty provider, and
• keep warranty insurance documents and records secure, maintenance requirements for
• have common property inspected before each part of the warranty insurance the common property, if any
expires (at 2, 5 and 10 years), were provided by the builder or
warranty provider.
• notify the warranty provider and builder in writing of a possible defect as soon
as possible and before the expiry of the applicable home warranty insurance
coverage,
• monitor repairs carried out by the warranty provider or builder as part of a
claim, and
• conduct maintenance to keep the building in good order and to maintain any
warranties.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 16

If You Discover a Possible Defect

If a possible construction defect is discovered in your home (or in common property

for stratas) while the policy coverage is in effect, review the policy immediately to see
if the defect may be covered by home warranty insurance.

If the damage could harm the building, you must do what you reasonably can to
keep the damage from getting worse; if you don’t, the warranty provider may limit
coverage. For example, if a plumbing leak occurs in the first two years, you should
shut off the water supply and immediately notify your builder and warranty provider.
Make sure the warranty provider approves of what you intend to do to limit STRATA INFORMATION
damage, however, because labour supplied by anyone other than the builder and
warranty provider may limit your coverage. For strata owners, it is important
to remember that individual
Strata Properties: In some cases the cause of damage in a unit will originate on unit owners are responsible for
common property. Check with your strata council, review your warranty insurance communicating a possible
policy or call your warranty provider to determine what is covered under your unit defect regarding their
policy and common property policy. individual unit, while strata
corporations are responsible
for communicating possible
FIND OUT HOW NEW HOMES SHOULD PERFORM defects in common property.
If you are not sure if the pos-
View the free online Residential Construction Performance Guide on BC Housing’s sible defect pertains to your
website. The guide explains how new homes should perform and which defects are individual unit or to the strata’s
covered by home warranty insurance, including defects in design, materials and common property, it is best to
workmanship. also send your letter (notice of
claim) to your strata corporation
as well.

Communicating a Possible Defect

Communicate a possible construction defect in writing to both the builder and
warranty provider as soon as possible and before the expiry date of coverage.
This notice of claim should include:
• your name, address and day-time phone number(s),
• your warranty insurance policy number,
• a thorough description of the problem and its specific location within the home, and
• any other applicable documentation, including previous communications you
may have had with the builder.

Keep a copy of your letter. Do not rely on email to communicate this information; a regular or
registered letter mailed through Canada Post is recommended. Follow up to verify the warranty
provider has received the notice of claim, especially if the warranty expiry date is approaching.

Strata properties: Individual unit owners are responsible for communicating a possible
defect regarding their individual unit, while strata corporations are responsible for
communicating possible defects in common property.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 17

If You Discover a Possible Defect

Working With Your Warranty Provider

After receiving your claim letter, the warranty provider must contact you to arrange
an evaluation of the possible defect. If the warranty provider rejects your claim as not
valid or not covered under your policy, the company must give you reasons in writing
and inform you of your rights to involve a mediator.

If the warranty provider accepts your claim, the company must arrange for the repairs
to be done in a reasonable time, and give you a written description of the work done,
when it was completed and any new warranty insurance expiry date established as a
result of the repair. The warranty provider makes the decision on whether the original
builder or another contractor will correct defects. Keep any documentation you receive
with your other warranty papers.

Under the Homeowner Protection Act, repairs must be undertaken in a timely manner,
with reasonable consideration given to weather conditions and the availability of
materials and labour.

WHO’S YOUR WARRANTY PROVIDER?

Know who your warranty provider is. To find out which company covers your next home:
• ask your builder or real estate salesperson
• look for a sticker on your main electrical switch box
• check your policy documents or your home maintenance manual if you
have one
• check BC Housing’s online New Homes Registry for homes built after
November 19, 2007
• contact the Licensing and Consumer Services branch of BC Housing for homes
built between July 1, 1999 and November 19, 2007

Access to Inspect and Repair

You must allow the warranty provider or the original builder access to your home to
investigate claims, inspect damage you have reported and inspect for maintenance
requirements at reasonable times, provided you are given advance notice. You must
also provide the warranty provider with all the information and documentation they
need to properly investigate the claim. You are also required to give the builder and
trades people reasonable access to make repairs. The involvement of the original
builder must not delay a warranty provider’s obligation to have repairs completed in
a timely and appropriate manner.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 18

If You Discover a Possible Defect

Resolving Disputes
MANDATORY MEDIATION

The Homeowner Protection Act and its Regulations give owners the option of initiating
mandatory mediation of disputes with their warranty provider over claims filed before
the expiry date of coverage. This process is explained in your policy.

Before the mediation session, the warranty provider and owner (or strata council exchange
statements of the facts and the matters in dispute. The mediator then conducts the media-
tion session to help the parties reach a solution that is fair, timely and cost-effective.

If there is no agreement, the mediator will end the mediation. The dispute must then
be resolved some other way, usually through the court system. The owner can choose to
forego mediation and move directly to some other form of resolution.

NOTICE TO MEDIATE

Separate from the mandatory mediation process, a Notice to Mediate (Residential

Construction) Regulation allows owners to compel any party to a residential
construction dispute to a structured mediation session. This mediation option is
available if a court action has been commenced and the mediation session takes place
no later than 180 days before the trial date.

MORE INFORMATION

BC Housing’s publication Options for Residential Construction Disputes can help you
understand the various forms of dispute resolution available. Find it at
www.bchousing.org.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 19

If You Discover a Possible Defect

GETTING ACTION

If, after following the information in this guide, you have a problem that you think
your builder or warranty provider is not handling properly:
• send a detailed description of the problem, including your policy number, to the
warranty provider and the builder
• make notes of every contact you have with the parties, including the date and
the response, and keep all correspondence
• get independent legal advice if there is no action in a reasonable time.
Your policy document sets out how your warranty provider is supposed to respond
to written claims. If you believe that the warranty provider is not responding in a
reasonable way, you can address your concerns to the warranty provider’s ombuds-
person or complaint liaison office. This information is available from the warranty
policy documents, your warranty representative, or on the warranty provider’s
website. If you are dissatisfied with the final decision of the insurer, there is also the
option to pursue the matter with an independent dispute resolution service such as
the General Insurance OmbudService at www.giocanada.org.

The Licensing and Consumer Services branch may be able to provide assistance if
you believe the warranty provider is not acting in keeping with their obligations
under the Homeowner Protection Act. Other resources may include the BC Financial
Services Authority and the Insurance Council of BC. The BC Financial Services
Authority (www.bcfsa.ca) addresses concerns regarding the Insurance Act,
Real Estate Development Marketing Act and other legislation under its jurisdiction.
The Insurance Council of BC (www.insurancecouncilofbc.com) handles complaints
about the conduct of licensed agents, salespersons and adjustors under its
jurisdiction regarding ethical conduct, integrity and competence.

Defects in Owner-built Homes

The 10-year statutory protection provisions of the Homeowner Protection Act apply
to construction problems in owner-built homes. Under the Act, the purchaser of an
owner-built home may launch a legal action against the builder if defects covered by
the statutory protection arise and the owner builder is not willing to remedy them or
reimburse you for the cost of repairing the defects.

Since there is no warranty provider, a subsequent purchaser’s right of action is limited

to the owner builder and his or her assets. If an action is already filed, any party in a
residential construction dispute may file a Notice to Mediate (Residential Construction),
described in the Resolving Disputes section. Other forms of dispute resolution are
explained in the publication Options for Resolving Residential Construction Disputes
available on the BC Housing website at www.bchousing.org.

BC HOUSING Guide to Home Warranty Insurance in British Columbia 20

Checklist

Follow this checklist to ensure you understand and are protecting your
home warranty insurance coverage.
r I know the name of my home warranty insurance provider
r I have a copy of my home warranty insurance policy, as well as any additional
builder or manufacturer warranties

r I know what my home warranty insurance policy covers and the coverage expiry
dates

r I completed a walk-through with the builder before taking possession of my new

home. On the form I noted any incomplete or deficient work in writing and set a
reasonable date for the builder to complete any repair work needed

r I received a maintenance manual or maintenance instructions from my builder

or warranty provider. I know what I must do to maintain my home in order not to
limit my coverage, and I regularly perform the required maintenance

r If I bought a resale home, I know about the nature and extent of any existing
warranty insurance policy

r I placed the sticker listing my warranty provider and coverage expiry dates on my
electrical box

r Shortly before each expiry date, I carefully inspect my home to identify any
problems in areas that are covered by the warranty

r If I find a possible defect covered by my home warranty insurance, I immediately

report the problem in writing to both the warranty provider and the builder

r I take reasonable steps to minimize further damage to my home that may result
from a potential defect

r I keep copies of all correspondence related to my home warranty insurance policy

r If I am a strata property owner, I know what is covered by the home warranty
insurance policy on my unit and by the policy on the common property

r As a strata owner, I report any problems with my unit in writing to the warranty
provider, and I report any problems with common property to the strata council
and/or the building manager

r If I bought an owner-built home, I have a copy of the Owner Builder Disclosure

Notice, and I know what protection the statutory warranty gives me

r If I bought a home in a multi-unit building that has had building envelope repairs,
I know if the repairs on this common property item are covered by home warranty
insurance, and, if so, how much time is left on the policy

BC HOUSING Guide to Home Warranty Insurance in British Columbia 21

Glossary

BUILDING CODE – the British Columbia Building Code or the Vancouver Building
By-law in effect at the time the building permit was issued for the new home; in
jurisdictions where a building permit is not required, the British Columbia Building
Code that was in effect when construction commenced

BUILDING ENVELOPE – the components that separate the indoors from the out-
doors, including the exterior walls, foundation, roof, windows and doors

BUILDING PERMIT – a certificate that must be obtained from the municipality or

regional district by the property owner or contractor before a building may be con-
structed or repaired

CUSTOM HOME – a home that is designed and built to the owner’s specifications,
usually on land owned by owner

HOMEOWNER – someone who buys a home, or contracts with a builder to construct

a new home

HOME WARRANTY INSURANCE – a contract of insurance covering defects in the

construction of a new home and consequential losses or costs incurred by the owner

LICENSED BUILDING ENVELOPE RENOVATOR – a repair contractor who is

licensed by BC Housing to perform building envelope renovations

LICENSED RESIDENTIAL BUILDER – a builder who is licensed by BC Housing to

build and sell new homes, including developers

OFFER TO PURCHASE – a written contract setting out the terms under which the
buyer agrees to buy a home if signed by both the buyer and the seller, it becomes a
legally binding document

OWNER-BUILT HOME – a new home built by an owner builder who is authorized by

BC Housing to build a home for personal use without being licensed and without
providing home warranty insurance

RESALE HOME – a home that has been previously owned and occupied and that is
being sold to a new buyer

STRATA – a form of housing ownership in which the buyer owns an individual unit as
well as a share of common property with other owners

WARRANTY PROVIDER – a person or company that is authorized under the Financial

Institutions Act to carry on home warranty insurance business in British Columbia

BC HOUSING Guide to Home Warranty Insurance in British Columbia 22

Additional Resources

Applied Science Technologists Canada Mortgage and Housing

and Technicians of BC – Property Corporation (CMHC) BC & Yukon
Inspectors (ASTTBC-PI) Regional Business Centre
10767 - 148th Street 20th Floor - 1111 West Georgia Street
Surrey, BC V3R 0S4 Vancouver, BC V6E 4S4
Tel: 604-585-2788 Tel: 604-731-5733
www.asttbcpi.org Toll-free: 1-800-309-3388
www.cmhc-schl.gc.ca
British Columbia Real Estate
Association (BCREA) Condominium Home Owners’
1420 - 701 Georgia Street West Association (CHOA)
PO Box 10123, Pacific Centre Suite 202 - 624 Columbia Street
Vancouver, BC V7Y 1C6 New Westminster, BC V3M 1A5
Tel: 604-683-7702 Tel: 604-584-2462
www.bcrea.bc.ca Toll-free: 1-877-353-2462
www.choa.bc.ca
Building Officials’ Association of
British Columbia (BOABC) Financial Consumer Agency of
Suite 205 - 3740 Chatham Street Canada
Richmond, BC V7E 2Z3 427 Laurier Avenue West, 6th Floor
Tel: 604-270-9516 Ottawa, ON K1R 1B9
www.boabc.org Tel: 1-866-461-3222
www.fcac.gc.ca
Canadian Association of Home
and Property Inspectors of British BC Financial Services Authority
Columbia (CAHPI-BC) (BCFSA)
#
5 - 3304 Appaloosa Road Suite 2800 - 555 West Hastings Street
Kelowna, BC V1V 2W5 Vancouver, BC V6B 4N6
Tel: 250-491-3979 (outside B.C.) Tel: 604-660-3555
Toll-free: 1-800-610-5665 Toll-free: 1-866-206-3030
www.cahpi.bc.ca www.bcfsa.ca

Canadian Bar Association, Government of British Columbia,

British Columbia Branch Building and Safety Standards
10th Floor, 845 Cambie Street Branch
Vancouver, BC V6B 5T3 Office of Housing and Construction
Tel: 604-687-3404 Standards
Toll-free: 1-888-687-3404 PO Box 9844, Stn. Prov. Govt.
www.cba.org Victoria BC V8W 9T2
Tel: 250-387-3133
Canadian Home Builders’ www.housing.gov.bc.ca
Association of British Columbia
(CHBA BC) Homebuilders Association
400 - 6400 Roberts Street Vancouver (HAVAN)
Burnaby, B.C. V5G 4C9 Suite 1003, 7495 - 132nd Street
Tel: 604-432-7112 Surrey, BC V3W 1J8
Toll-Free: 1-800-933-6777 Tel: 778-565-4288
Email: info@chbabc.org www.havan.ca
www.chbabc.org

BC HOUSING Guide to Home Warranty Insurance in British Columbia 23

Additional Resources

Insurance Council of British Society of Notaries Public of

Columbia British Columbia
Suite 300 - 1040 West Georgia Street 1220 - 625 Howe Street, Box 44
P.O. Box 7 Vancouver, BC V6C 2T6
Vancouver, BC V6E 4H1 Tel: 604-681-4516
Tel: 604-688-0321 Toll-free: 1-800-663-0343
Toll-free: 1-877-688-0321 www.notaries.bc.ca
www.insurancecouncilofbc.com
Urban Development Institute (UDI)
Law Society of British Columbia Suite 200 - 602 West Hastings Street
845 Cambie Street Vancouver, BC V6B 1P2
Vancouver, BC V6B 4Z9 Tel: 604-669-9585
Tel: 604-669-2533 www.udi.bc.ca
Toll-free: 1-800-903-5300
www.lawsociety.bc.ca Vancouver Island Strata Owners
Association
Licensing and Consumer Services Box 601
Branch of BC Housing 185 - 911 Yates Street
203 - 4555 Kingsway Victoria, BC V8V 4Y9
Burnaby, BC V5H 4T8 Tel: 250-920-0222
Tel: 604-646-7050 Toll-free: 1-877-338-4762
Toll-free: 1-800-407-7757 www.visoa.bc.ca
www.bchousing.org

Manufactured Home Registry

BC Registry Services
PO Box 9431, Stn. Prov. Govt.
Victoria, BC V8W 9V3
Tel: 250-387-7848
Toll-free: 1-877-526-1526
www.bcregistryservices.gov.bc.ca

Real Estate Council of British

Columbia (RECBC)
900 - 750 West Pender Street
Vancouver, BC V6C 2T8
Tel: 604-683-9664
Toll-free: 1-877-683-9664
www.recbc.ca

BC HOUSING Guide to Home Warranty Insurance in British Columbia 24

Licensing and Consumer Services 203 – 4555 Kingsway
Branch of BC Housing Burnaby, BC V5H 4T8
www.bchousing.org Telephone: 604-646-7050
Email: licensinginfo@bchousing.org Toll-free: 1-800-407-7757